German GDP growth slump sends shares tumbling
German growth fell sharply in the second quarter of 2011, piling pressure on leaders of the eurozone’s two largest economies, set to discuss the bloc’s worrying finances.
The latest GDP figures showed Germany’s economy barely expanded at all in the second quarter, with growth of just 0.1%.
The figure was down sharply from first quarter growth of 1.3%, and sent futures tumbling, with the Dax poised to open down 0.6%, and French futures off 0.5%.
Elsewhere in the eurozone Spain’s economic expansion slowed to just 0.2% last quarter, down from 0.3% over the previous three months.
France’s economy did not grow from April to June.
The gloomy figures will add to the pressure on Germany’s chancellor Angela Merkel (pictured) and French president Nicolas Sarkozy as they meet to discuss the eurozone’s worries.
The weaker than expected growth from Germany, Europe’s largest economy, will exacerbate fears about the health of the eurozone and its chances of battling through its current woes.
In reaction German investors sold shares this morning, with the Dax shedding 1.34% by 0920 CET.
The news dampened the mood after a positive spell on Wall Street where traders enjoyed a third day in a row of gains.
The S&P 500 closed up 2.2% at 1,204.4 points overnight, while the Dow put on 213 points to close at 11,482.9, after Google announced a mammoth $12.5bn deal to buy Motorola’s mobile phone manufacturing arm.
The deal boosted sentiment elsewhere as well as in the US, with the Nikkei closing up 0.23% at 9,107 points.